[privatebanker]

You are right Poway, speculation has caused a lot of problems in the markets. Nothing new there but nothing grows to the sky , everything returns to a mean at some point. As we have observed with Real Estate, a lot of amateurs have come to play in the later stages of the game and are now getting hurt or on their way to be.

As for China, I think it’s hard to say if they could be a self sufficient economy. We will have to wait and see on that. They are currently very dependant on foreign economies.

As for wages, it would take a very, very long time for wages to catch up with housing prices. We really don’t have to speculate with this concept (housing prices) because it’s been proven time and time again that when an asset class deviates out of it’s historical mean of return it ALWAYS corrects. Unfortunately, our current situation with RE prices has a lot of emotion embedded in it. This will intensify the “Hard Landing”.

[privatebanker]

Another lipstick on the pig ceremony.

[privatebanker]

You’re right, the press typically is going off pure speculation. That’s the issue with real time news, etc. They are always jumping to be the first to make the report without doing extensive research. I personally think this pullback is a very healthy, needed one. Stocks were getting expensive, emerging markets (BRIC) were growing to the sky and commodities were being driven by a lot of speculation. I think over the long term trend, we will see the markets continue to improve but we need to have our checks and balances along the way. Commodities such as Gold and Oil have seen a pull back as of lately however, look for that to move north again soon.

Here’s something new and interesting but certainly not investment advice or a recommendation. One can now gain easy exposure to futures & commodities without the complications by buying ETNs (Exchange Traded Notes). These track the Dow Jones AIG Commodities Index (DJP) or the GSCI Total Return index (GSP). Do your homework first of course.

[privatebanker]

The boys over at PIMCO have always had a very unique view on the markets. I was so happy to have read that article a few days ago while visiting their website. It’s a very good site to check in on from time to time.

[privatebanker]

Saiine,

I’ve read a lot of the recommendations that people have been giving you which is very nice but they didn’t ask you what your objective is here.

I think your best bet would be to meet with a financial advisor/planner. This is the last place that you would want to receive investment advice. No one here knows your total situation and could be subject for the advice they have given thus far. Get advice from a professional, you’ll be glad you did.

[privatebanker]

You’re right ZK. When people involve emotion in to the thought process of their investments, whether it be real estate, stocks, etc. they tend to make irrational decisions. The past few years have provided homeowners’ a windfall of money that they most likely would never have realized by just saving by doing nothing more than just owning a home.

But just remember, as the saying goes: “easy come, easy go”. Everything is cyclical and all assets eventually return to a mean.

[privatebanker]

What the heck is that all about? Finance 101?

[privatebanker]

I didn’t read your blog but some sell programs went off which was expected. Like I said, the market will pull back indeed. This a healthy correction. I can see the market pulling back a lot more than current levels. Again, I think that would be healthy. But in the longer term, I have no worries. By the way, I have an inside view on what the big money is doing i.e. institutional investors. I see a major shift to alternative asset classes. But they have not abanded their core equity positions. A derivatives overlay strategy has been used in many cases. My point here is I wouldn’t be chasing any hot ideas here like I have read in this post. I’ve seen investors get really burned with this philosophy.

[privatebanker]

Good luck!

[privatebanker]

I’m not too worried about a correction in the near term, it will be very healthy for the long term. I see a lot of dooms day claims here which I think is rather entertaining. Don’t buy into all the hype, sure the market will definitely be affected by the drop off in consumer spending when the “house ATM” runs out of cash, unemployment is skyrocketing and interest rates are high. Everything is cyclical. I have roughly a 25% exposure in alternative assets which has and will do very well as market volatility picks up. But in the long run, those who stick to their guns will ultimately be rewarded. I don’t see the big money running for the exits yet. I’ve also been overweighted in international & emerging markets for quite some time. Don’t chase the hot dot, yesterday’s winners, etc.

[privatebanker]

If I recall this correctly, I believe Warren Buffett was pounding the table about the tech bubble right at it’s plateau. I think we are at the same point with the real estate/credit market. I think we would be in a more panic situation with real estate if the pricing was more transparent. If homeowners were able to see the price fluctuations in their real estate investments, they would certainly begin the panic selling process tout de suite.

[privatebanker]

True, my bad. Just trying to make Poway feel better. For all I know that guy could be a real good guy.

[privatebanker]

I wouldn’t let that little weasel get under your skin. Keep the posts and research going. I’ve enjoyed it and from what I see, you spend a lot of time researching on this topic.

[privatebanker]

Are you serious?! No wonder that tooth has been sitting under my pillow for all those years! I’ve been waiting for my big windfall! I’d better let JP Morgan know that their derivatives are no good anymore, thanks for clearing that up.

[privatebanker]

OK, here’s my take on this just for sake of debate. I totally respect your views first and foremost.

Mutual Fund managers do carry a cash position which can vary depending on market conditions and the fund’s objectives. They can also employ derivative strategies to protect asset value. This takes us into another category. Active fund managers can manage a cash position depending on how the market is behaving. They may not keep it for a long time but there is no rule against them doing so. If you invest in an index fund, you probably won’t have any cash position and no break from a crashing market. These funds offer daily liquidity so people that start panicking on a market dip can get out. The successful investors are the ones who stay in for the duration.

The last bear market to my recollection was fairly recent. I believe it really got started in March of 2000. Before that, back in the 80’s, the market was pretty ugly for a while. My point here is everything is cyclical. Certain assets will outperform other assets depending on macro and micro economic situations. Always make sure that you invest in a fund where the manager has been around for atleast 5-7 years.

I just think investors need to keep a grander view of their investments and not focus on short term trends. If you do your homework and pick the right managers you should be fine. Have exposure to as many noncorrelating asset classes and stick to an asset allocation policy of rebalancing.

But like I said, this is just my view and I’ve been in the business a long time and have experienced a lot of crazy markets (up & down).

[Author]

Posts